We review the Pensions Age/Aon Hewitt administration seminar, where experts shared views on improving the member experience in an ever-changing landscape

Pension schemes were offered some help coping with the ‘relentless’ change to their administration requirements at a seminar in London this month, as Aon Hewitt and Pensions Age brought together a collection of expert speakers to look at some of the key developments in the area.

Chaired by Aon Hewitt commercial director Colin Hamilton, the seminar welcomed around 100 people to the IoD hub to hear presentations covering regulation, technology, the member experience, and key learnings from other industries.

The Pensions Regulator has been working to try to help schemes lift administration and record-keeping standards, and will soon publish further guidance. Promoting and improving understanding of the good administration of work-based pension schemes is one of the regulator’s statutory objectives.

Delivering a keynote address, the regulator’s policy lead for defined contribution, administration and governance Louise Hallard said auto-enrolment will only increase the need for high admin standards.

Implementation of a ‘pot follows member’ approach to small pots is expected to see up to 1.5 million transfers per year, and Hallard said the success of the process will depend heavily on the quality of data and systems.

The increase in transfer activity could also heighten the risk of pension liberation fraud, Hallard said.

“We know that the point of transfer is when pension liberation fraud is most likely to occur, so we need to make sure that there are mitigations in place,” she said. “We’re working closely with DWP as they develop their policy and develop their process to make sure that all of the risks are on the radar and that they’re appropriately addressed.”

Aon Hewitt client director Geraldine Brassett looked at how the pace and volume of change - legislative and otherwise - can be dealt with in scheme administration.

Brassett said a ‘roadmap’, shared between administrators and stakeholders, is a useful tool in managing change.

The roadmap should include a variety of influences, including legislative change, market-driven change, operational change, strategic direction for both the scheme and sponsor, and specific projects including corporate activity.

Brassett said all her clients used a shared roadmap, and this made a “huge difference” in managing scheme administration.

“It’s all about understanding the benefits of why you’re doing what you’re doing,” she said. “It gives everybody visibility, it gives you confidence in what you’re doing, it gives you that sense of control. And it makes sure that the trustees, the scheme sponsor, and the administrators are strategically aligned in what they’re doing.”

The potential for new ‘defined ambition’ pension models was among the possible future changes administrators need to be mindful of.

DA could take many forms, Brassett said, and administrators need to be aware of what their systems can do.

“It highlights the need for communication between trustees, sponsors, and the administrator, to make sure that if defined ambition does take off whatever scheme design there is can be administered.”

Technology can be a useful tool in improving admin cost control and efficiency, Aon Hewitt business solutions and innovation director Philip Dickinson said, but it is important not to be “seduced” by it.
Dickinson stressed that the member experience is paramount in the way schemes are administered.

Technology can help member communications, but it needs to be understood in the wider context.

“There’s a journey to go on, and technology can help that, but ultimately people need to understand that there are still decisions that they need to make. We can provide systems and we can do it cost-effectively, and we can have different communication channels but ultimately people need to understand where they’re going.”

Automating processes can lift the efficiency of administration and improve cost control, but Dickinson said it was important not to simply throw technology at problems. Maintaining quality data is as important as ever, and the human element of service delivery is key.

“Technology is an enabler, it’s not the be all and end all.”

After the coffee break, The Institute of Customer Service chief executive Jo Causon highlighted the importance of customer relations and engagement in the retail sector and how this can be applied to the pensions industry.

“Competence of staff, how the customer is handled and how the customer is treated are the main areas to
be looking at as these are the issues that people most complain about in the UK,” she said.

In the same way, pension providers and pension schemes should form an emotional connection with their customers and involve them in the co-creation of business development.

Next up, The Pensions Advisory Service head of dispute resolution Tony Attubato revealed that it is receiving around 5,000 complaints each year, and that overpayments of pension benefits were a particular problem.

The biggest overpayment value Attubato has personally seen while at TPAS was £400,000, and mainly arose due to poor record keeping. Any individual who is aware they have been overpaid should notify their scheme to ensure that cases are “nipped in the bud early”, he said. He likened the situation to people spending a mispayment on a £5,000 cruise. If they realised an error had been made they would be expected to cancel the cruise, and repaying pensions are no different.

Aon Hewitt client relationship director Derek Meldrum later spoke of the importance of “making members important and anticipating their needs”. Administrators and the industry should increase the importance they place on member feedback, Meldrum said, in order to drive improvement within the industry. Benchmarking customer satisfaction against external industries is also particularly important to boost the sector as whole, he said.

The half-day seminar concluded with a Q&A session, chaired by Aon Hewitt’s Matthew Arends and bringing together speakers from throughout the day. Colin Hamilton gave the view that while administration outsourcing is not for every scheme, it is something that is only going to increase as in-house teams deal with increasing administrative challenges.

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